Another milestone is a young couples life could be considering starting a family. Lets cut right to the chase…children are expensive. When I assist couples with their financial plan that are expecting or just had a child, the looks on their faces are priceless. When you see how much children cost throughout their lives…from childcare costs when they’re young, to extracurriculars in grade school and high school, to saving for college…let’s just say it’s typically a high number.
I don’t say this to be a downer, just to put a realistic spin on what the financial reality of having children brings to the table. Being aware of this at an early stage makes it much easier to manage as they grow up, without having to sacrifice your standard of living now or in retirement.
1. “You can get loans for college, but you can’t get a loan for your retirement” – This is one of my favorite quotes from my mother, because it cuts to the core. Yes, in an ideal world, every child’s college would be fully funded…we don’t live in that world though.
2. Control your living expenses – Building on that last point, if you look at your expenses and see that saving for college is something that will jeopardize your lifestyle, you would be better served by looking at loan options for your kids before sacrificing your retirement savings. Plus, budgeting will help you know what’s available to save.
3. 529’s – These are the best vehicles for saving for college currently available. Their distributions are tax-free if they’re used for education, and their beneficiaries can be changed for flexibility, and it’s a good idea to start putting some savings into one of these accounts.
4. Be Realistic – Does private school for hypothetically $20k a year make sense if you live in a good public school district? Your budget will be the ultimate judge of that. Are incredibly expensive extracurriculars worth the extra expense? Again, that’s up to you and your budget, but don’t let peer pressure from other parents and kids dictate how much you spend if it’s not a realistic situation.
Having children is a blessing that will enrich your life. Absolutely, you would do anything for your children, but don’t forget you have a responsibility to yourself too. Having control of your living expenses is an incredibly important aspect in making the decision to have and raise children, and this control gives you awareness to make sure that both you and your children are in the best financial situation they can be in.
We’d love to talk and get to know more about you and your family. Each situation is unique, and each set of parents has different goals and desires for their children. The more we know about who you are and what you want, the more we’re able to help, so feel free to reach out to me at sdieck@pistonewealth.com
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Investment advice offered through Stratos Wealth Advisors, LLC, a registered investment advisor. Stratos Wealth Advisors, LLC and Pistone Wealth Advisors are separate entities.
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